NORTH PLAINFIELD, N.J., Feb. 1, 2017 – Retailers in Levin Management Corporation’s (LMC’s) 95-property, 13 million-square-foot shopping center portfolio are feeling good about the coming year. In fact, three quarters (74.5 percent) of respondents in the company’s annual Retail Sentiment Outlook Survey of store managers are optimistic about their anticipated 2017 performance – the highest percentage in the January poll’s six-year history.

According to LMC’s Matthew K. Harding, president of the North Plainfield-based commercial real estate services firm, this positive expectation follows strong 2016 performance for LMC tenants. The percentage of respondents reporting 2016 sales at the same or higher level (68.8 percent) was the highest in Outlook survey history. This finding falls in line with a positive year for retail nationwide. According to the U.S. Department of Commerce, 2016 retail sales rose 3.3 percent over 2015; for context, 2015 retail sales were up 2.1 percent from 2014.

Likewise, the percentage is of LMC survey respondents reporting holiday seasonal sales and shopper traffic at the same or higher level than last year were the strongest in survey history at 75.6 and 74.4, respectively. “Industry experts agree that the recent holiday season was good for retail, yet some have indicated ecommerce was the real winner over bricks and mortar,” Harding said. “From a ground-level perspective we are seeing a different story – one illustrating the ongoing relevance of physical stores within the LMC portfolio, which is comprised mostly of open-air shopping centers.”

Supporting LMC’s results, the International Council of Shopping Centers (ICSC) in its Post-Holiday Shopping Survey found consumers spent an average of $711 on gifts and seasonal items during the holidays – a 16 percent increase over 2015’s post-holiday survey results. Further, ICSC reported 91 percent of holiday shoppers spent at bricks-and-mortar locations.

EXPANSION AND HIRING

LMC survey participants were asked about their companies’ expansion plans for 2017, and more than one-third (35.1 percent) indicated their brand plans to open additional stores this year.

“Again, our tenants may seem to counter current headlines reporting ongoing store closings by major retailers,” Harding said. “But in the 65 years LMC has been leasing and managing retail properties we have witnessed the ongoing transformation of retail. Ultimately, concepts come and go, creating opportunities for new and expanding players. Today is no different, and our tenants are proving this point.”

The lower unemployment rate and its impact on retail hiring also was addressed in the LMC Outlook Survey. Only about one-quarter (23.6 percent) of respondents have seen changes in the hiring climate related to the tightening jobs market. Of that group, more than half (51.7 percent) indicated they are seeing applications by fewer qualified job candidates, and nearly half (46.6 percent) said they are experiencing demand for higher starting salaries.

ECOMMERCE IMPACT

The ecommerce phenomenon – and its impact on bricks-and-mortar – has remained top-of-mind for LMC, and the organization continues to gauge how its tenants are taking action. The 2017 Outlook Survey asked whether retailers have adapted their business models in response to ecommerce growth.

Marking a notable jump from the last two times the question was asked, 55.2 percent of survey participants indicated they have adapted in some way. This compares to 38.2 percent of respondents in LMC’s 2016 Mid-Year Survey and 37.3 percent at mid-year 2015. Among that group, LMC retailers have:

In turn, 57.5 percent of the respondents who have adapted in response to ecommerce say they have seen a benefit in terms of sales and/or in-store traffic. That percentage compares to 43.0 percent at mid-year 2016 and 52.1 percent at mid-year 2015.

“In our last two mid-year surveys, about one-third of tenants (32.9 percent and 30.9 percent) were unsure of whether their efforts were making a positive impact,” said Melissa Sievwright, LMC’s vice president of marketing. “The number shrank to less than a quarter (24.4 percent) in the 2017 Outlook Survey, indicating that tenants are beginning to see more measurable results.

“This is very good news in an environment requiring retailers to continually reinvent themselves,” she added. “We anticipate continued changes as our tenants strive to establish the best mix of services and incentives, and elevate and personalize the shopping experience to draw customers into their stores.”

LMC’s next Retail Sentiment surveys will be conducted in May, reporting mid-year progress and exploring technology issues, and in October/November, gauging expectations and plans for the holiday season. Celebrating its 65th anniversary in 2017, LMC serves as a trusted single-source commercial real estate services provider for institutional and private owners. The firm helps its clients evaluate options, operate properties and create case-specific solutions to protect and improve asset value. LMC offers leasing, property management, accounting, construction management and marketing. The company’s services continue to evolve with new technologies, efficiencies and sustainability-focused initiatives to serve a new generation of properties, investors and tenants.

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